By Veronica Smith (AFP) – 1 hour ago
WASHINGTON — US retail sales kicked off the holiday shopping season with gusto in November as shoppers opened their wallets in crucial spending that could help the economy’s weak recovery.
Retail and food services sales rose 0.8 percent from October to 378.7 billion dollars, the Commerce Department said.
It was the fifth consecutive month of gains but the increase was much better than the 0.5 percent expected by economists.
“Overall, the November retail sales report was a strong report that flew in the face of the weak wage growth reported in the November employment report,” said Patrick O’Hare at Briefing.com.
Despite high unemployment that has nearly one in 10 workers without a job, shoppers swarmed into stores and online fueling the consumer spending that makes up two-thirds of activity in the world’s largest economy.
In a further sign of momentum, the department hiked the October retail sales increase by a half percentage point to 1.7 percent.
“The bottom line is that retail sales have scored yet another upside surprise and indicate quite strongly that consumers are once again spending at a healthy pace,” said David Resler at Nomura.
Given the retail strength of the last two months, the Nomura analyst said consumer spending could grow at a 3.0 percent clip in the fourth quarter, suggesting gross domestic product growth was on course for a 3.3 percent advance.
GDP grew only at a 2.5 percent annual pace in the third quarter, long after the recession officially ended in June 2009.
The retail data came as Federal Reserve policymakers debated the course of monetary policy and efforts to stimulate growth to reduce unemployment.
The Federal Open Market Committee is widely expected to hold interest rates at historically low, near-zero levels, where they have remained for two years in a bid to spur growth.
The FOMC also was expected to comment on its November decision to pump 600 billion dollars into the economy through asset purchases until mid-2011.
Other numbers in the Commerce Department report highlighted resurgent demand as retailers slashed prices for Black Friday, the day after the Thanksgiving holiday that unofficially starts the holiday shopping season.
The day, this year on November 26, became known as Black Friday because it traditionally puts retailers’ accounts into the black.
“The holiday season has started strongly,” said Ian Shepherdson of High Frequency Economics. “One month is not a season but so far so good.”
Automobile sales, which had led the October gain in retail sales with a 5.6 percent surge, fell 0.8 percent in November.
Excluding auto sales, retail sales jumped 1.2 percent in November, twice as much as expected and the biggest rise since February.
The data, which are adjusted but not for price changes, showed retail sales rose 7.7 percent from November 2009.
Over the first 11 months of the year, retail sales were up 6.5 percent from the same period a year ago.
November retail sales were led by a sharp 4.0 percent jump at gasoline stations amid rising energy prices.
Briefing’s O’Hare noted that core retail sales, which exclude gasoline stations, autos and building materials, increased a solid 0.9 percent.
The core number is used to estimate consumer goods spending as a component of gross domestic product, the nation’s economic output.
The November control number “was very positive for fourth-quarter GDP growth,” said Brian Jones at Societe Generale.